Snapshot inc. is a company that manufactures picture frames. Due to increasing demand in the picture frames market, Snapshot Inc. has decided to acquire new machines to produce its newly designed NoRemote digital frames. The firm is considering the acquisition of a new machine that will cost $800,000. Freight and installation necessary to put the machine in service will cost $40,000. The firm expects that due to increased sales, working capital accounts will increase by $45,000.

Snapshot Inc. expects the useful life of the machine to be six years and will use the straight line method of depreciation over this period to a salvage value of zero.

Revenues expected from NoRemote are $780,000 per year. The firm expects the sales on original picture frames to decrease by $280,000 a year, as customers switch to the new product. Operating costs excluding depreciation are estimated at $240,000. The company is in the combined 35% state and federal tax brackets.

What are the estimated initial costs (year 0 cash flow) on project No Remonte digital frames?

Group of answer choices

$840,000

$780,000

$885,000

$925,000